I have tried a ton of things and cannot get Daggerfall to run using dagger.exe due to it telling me that it looks like I inserted the wrong CD. I do tend to agree with Dr. M though, in that I have Windows create a 3GB pagefile on this system due to me having 2GB of RAM, and the pagefile contents are rarely used according to various monitoring tools, and instead Windows uses primarily my main RAM. The exception to this rule is after a few hours of Oblivion!
Svinlesha, the "freesize" parameter has to do with free hard-drive space, not memory or CPU. The configuration I use for Daggerfall is now pasted below. You may copy it if you care to try it. If it doesn't work, then I would tend to think that something is eating up your CPU. You can check this by starting Daggerfall and getting in-game, then using alt+enter to make the game windowed, and then pressing ctrl+alt+del to bring up the Task Manager and viewing the performance tab to see CPU usage. If it is pegged at 100%, your CPU is choking while running Daggerfall. You can then check the processes tab to see which programs are using CPU. If only DOSBox is using CPU, then your CPU just can't handle it, but if DOSBox is only using 50~70% of your CPU, then something else is choking it out.
[sdl]fullscreen=Truefulldouble=Truefullresolution=originalwindowresolution=originaloutput=overlayautolock=truesensitivity=200waitonerror=falsepriority=higher,normalmapperfile=mapper.txtusescancodes=true[dosbox]language=memsize=16machine=vgacaptures=..\Captures[render]frameskip=0aspect=falsescaler=normal2x[cpu]core=dynamiccycles=maxcycleup=1000cycledown=1000[mixer]nosound=falserate=44100blocksize=2048prebuffer=10[midi]mpu401=Intelligentdevice=defaultconfig=[sblaster]sbtype=sb16sbbase=220irq=5dma=1hdma=5mixer=trueoplmode=OPL3oplrate=44100[gus]gus=falsegusrate=44100gusbase=240irq1=5irq2=5dma1=3dma2=3ultradir=C:\ULTRASND[speaker]pcspeaker=truepcrate=11025tandy=autotandyrate=11025disney=false[bios]joysticktype=2axis[serial]serial1=dummyserial2=dummyserial3=disabledserial4=disabled[dos]umb=Truexms=Trueems=True[ipx]ipx=false
I hope that information and/or this code helps. Oh, and note that I use true SB16 settings, such as the SB16 using IRQ5, not IRQ7. I own three of them and they all came with the jumpers set to 5, not 7. DOSBox defaults to 7 on the SB16, unless I am mistaken, which is incorrect. The SBPro was 7.